Savings Bond vs. Savings Account?

Question

I would like to cash in some of my savings bonds to put into my savings account for a trip i have comming up so that i can do it and get it over with. My savings bonds have not reached their full maturity yet, so I would like to know if my money will continue to accumulate the same amount of interest if i put it in my savings account?

if not, how does interest work? i mean is it based on different banks or is there a national interest rate per year?

? · Accepted Answer

You only receive the interest rate you do on the savings bonds because you loaned the money to the United States government, and (sort of) promised to let them borrow it for a long time*.  If you cash the bond, the government no longer has a contract with you.  You will get whatever rate the bank offers when you put it into your savings account with them.   [ The interest contract is now between you and the bank. ]

* there may be some sort of interest penalty or discount for cashing early; idk the rules anymore.

Different banks offer different interest rates, but the U S gov rate is the same nationally (but based on when you bought the bonds).

Smartass · Answer

In the US, savings bonds and savings accounts will earn close to nothing if you do not wait for maturity.

With that said, EVEN IF YOU DID, it would earn you about 1% on your money. 

Lesson learned? Don't do it, don't waste your time with them, you can do better just collecting change and cutting coupons.

Anonymous · Answer

You would seem at some fairly strong corporate bonds. Seem for rather just right corporation names and life of about 5-7years max. Funding grade (BBB or better). Yield perhaps 5-5.5% you wish to have some thing at or near par. Feels like you might be in US (Checking account). If you wer UK i would say seem on the rETAIL bOND mARKET (OBR) the place that you would be able to buy BONDS within the predominant MARKET.

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Savings Bond vs. Savings Account?

3 Answers